Method and system for dynamic pricing

ABSTRACT

A computer system and method for dynamic pricing is described. The system includes at least one dynamic calculator, which performs calculations based upon conditional rules.

FIELD OF THE INVENTION

[0001] This invention relates to computer systems and, more particularly, to computer systems for generating dynamic pricing information.

BACKGROUND OF THE INVENTION

[0002] Various computer pricing mechanisms have been available to date. Typically, these have used a static pricing scheme such as a look-up table of pre-priced items. In such a scheme, each item in a store would have a price and a percentage discount stored in the look-up table. If a customer purchased an item, the system would determine the price of the particular item and whether a discount is to be applied to that item, and calculate a price. If the price of the item changed, or if the discount to the item changed, the look-up table would have to be updated. This would be required for every item on the list.

SUMMARY OF THE INVENTION

[0003] According to the present invention, a method and system for dynamic pricing is described. Dynamic pricing is accomplished through the use of at least one dynamic calculator, which performs calculations based upon conditional rules.

[0004] In preferred embodiments, the system may include at least one static calculator. Static calculators can include pre-calculators and/or post-processing calculators. Pre-calculators determine an initial price, such as a list price or a sale price. Alternatively, a module may be used to set an initial price. Post-processing calculators make final adjustments based on a price generation algorithm, such as rounding the price to the nearest $0.99.

[0005] Between the pre- and post-calculators is at least one dynamic calculator that uses rules-based methodology to dynamically determine discounts to the initial price determined by the pre-calculators. Each dynamic calculator is made up of a qualifier and a discount calculator. The qualifier applies rules to determine if an item is qualified to receive a discount. The rules for qualification generally comprise a condition that must be satisfied. Rules sometimes also include a target upon which to apply the discount. If an item is determined to be qualified to receive a discount, the discount calculator applies it to the price.

BRIEF DESCRIPTION OF THE DRAWINGS

[0006]FIG. 1 is a block diagram of components of the pricing system according to an embodiment of the invention;

[0007]FIG. 2 is a block diagram of a pricing engine according to an embodiment of the invention;

[0008]FIG. 3 is a block diagram of a pre-calculator operation according to an embodiment of the invention;

[0009]FIG. 4 is a block diagram of a post-processing calculator operation according to an embodiment of the invention;

[0010]FIG. 5 is a block diagram of a discount calculator operation according to an embodiment of the invention; and

[0011]FIG. 6 is a diagram of steps performed during a qualifier operation according to an embodiment of the invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT

[0012] As shown in FIG. 1, a computer system for customized pricing 10 includes a customer terminal, such as a PC, where a customer can access a web browser 30. The web browser 30 is connected via software and hardware that is well known to those skilled in the art to a commerce server 40. The commerce server 40 is also connected through hardware and software known to those skilled in the art to at least one pricing engine 50.

[0013] When the customer decides to shop on the Internet, he accesses a web site on a browser 30 that sells products of interest to him. The customer then selects items that he may be interested in purchasing and makes a request to the commerce server 40. The request may be one of several, such as a request to view a product and the price of the product on the browser or, perhaps, a request to view an entire shopping cart total for the items selected. Once such a request is made, the commerce server 40 consults the pricing engines 50, where a price for the item is determined. Details of this pricing procedure will be addressed below. Once a price is determined, the price is fed through the commerce server 40, and a response is provided to the customer with a specific price for that item.

[0014]FIG. 2 provides an overview of the pricing engines. A preferred embodiment of the system includes four pricing engines, but any number of engines may be provided. In this particular embodiment (not shown), there is an “items” engine that calculates a price for a particular item, a “shipping” engine that calculates the shipping price of a particular item, a “tax” engine that calculates the applicable tax for a particular item, and an “order engine” that determines the price for all items in the order as well as any shipping costs and applicable taxes. Each separate pricing engine can apply separate discounts to the order. The particular engines included in the system and the determination of which engines will be consulted during a transaction are determined by the website designer. For example, the items engine may display dynamically discounted prices to a customer as the customer browses the site, before the customer has indicated a desire to purchase anything.

[0015] Each pricing engine is generally made up of a series of calculators that perform different functions in calculating the price. Price information (PI), which will ultimately provide the price output from the pricing engine, begins in the engine as a blank slate. As it interacts with each system calculator, it includes the most recent price calculation.

[0016] In a preferred embodiment, there are three types of calculators. As depicted in FIGS. 2 and 3, pre-calculators 60 replace the blank Price Information (PI) with an initial price, typically a list price, for the item without any discounting. This can be a price from a typical look-up table, as described in the Background section. Pre-calculators perform only static calculations, which are calculations that are not conditioned on anything. For example, sale prices of items are static calculations because they apply regardless of the conditions under which the order is placed. A series of pre-calculators can be used to apply a series of static calculations to obtain a series of initial prices I_(x) (I_(x)=I₁ to I_(N), where N is the number of calculators used). For example, a first pre-calculator can apply the list price I₁ to the item and a second pre-calculator can apply a sale price I₂ to the same item. Thus, when the pre-calculation is complete, the current price information (PI) is the value of the initial price (I_(N)) 65.

[0017] The second series of calculators, discount calculators 70, determine what, if any, discounts are to be applied to the item. “Discounts,” here, is used generically and may include either price reductions or price additions. Discount calculators operate on dynamic rules-based methodologies, which will be described in detail below with respect to FIGS. 5 and 6. The rules dynamically determine whether the prices of certain items need to be adjusted from the initial price, and the discount calculators perform that function. A series of discount calculators calculate a series of discount prices D_(x) (D_(x)=D₁ to D_(N)) by performing the rules-based calculations on the initial price (I_(N)) to calculate a final discount price (D_(N)). This price is output from the discount calculators as the current price information (PI).

[0018] Finally, as depicted in FIGS. 2 and 4, post-processor calculators 80 modify the discount price (D_(N)) 75 based upon price generation algorithms 100 decided upon by the site designer. For example, an algorithm may round all prices to the nearest $0.99 to make them appear less expensive, or discount the items 15 percent. Accordingly, these post-processing calculators perform static calculations, similar to the pre-calculators. Each separate algorithm is performed by a separate post-processing calculator, and the price information (PI) is updated for each post-processing calculated price P_(x) (P_(x)=P₁ to P_(N)). Thus, the output of the post-processing calculators P_(N) (85) is part of the final Price Information (PI) that is output from the pricing engine 50 and sent to the user.

[0019] In one embodiment, this final Price Information (PI) includes the price of the order, the price breakdown of all items in the order including any shipping and tax costs, and the price calculation history that details everything that happened to the price as it was adjusted by the various calculators. This pricing metadata would thus include calculations made to the price and the rules used to calculate the price. As such, it can be very useful if a customer subsequently changes the order and a new price must be recompiled. Assuming the rules still exist, they may simply be re-run to determine the new price. If, however, any of the rules had changed in the interim (e.g., because of the later date), the revised rules would be run. Some or all of the Price Information typically would be sent to the user, and some or all of the Price Information typically is stored by the pricing engine or the server for later use.

[0020] In other embodiments, the final Price Information (PI) may be different depending on the pricing engine involved and the needs of the particular application. For example, for the “items” pricing engine, the final Price Information may only include the price of an item purchased as well as the price calculation history for that single item.

[0021] The operation of the pricing engine will be described generally with respect to FIG. 2. Aspects of a Price Environment (PE) 90 are formulated in the commerce server 40 (FIG. 1) and input into the pricing engine 50. A Price Environment describes the state of the commerce server with respect to a particular user at the time the price is being generated. This environment may include details of the possible transaction, such as the customer profile, which is all information gathered about the user; the locality of the possible purchase, which includes specific geographical information such as the appropriate language and currency to apply; the order at issue, which is shopping cart information including items selected and the shipping information; the products in the order; and the rules governing the discounts to be applied to the order.

[0022] Once in the pricing engine, the Price Environment (PE) is sent with the blank Price Information (PI) to the pre-calculators 60 to determine the initial prices for items in the order. As depicted in FIG. 2, there may be multiple pre-calculators acting upon the Price Information (PI). The current Price Information (I_(N)) is then sent to the discount calculators 70 where the discount rules are applied to the items. Again, there may be multiple discount calculators that each apply a separate rule to the Price Information. Finally, the discounted Price Information (D_(N)) is sent to the post-processor calculators 80 where the prices are adjusted in accordance with selected algorithms. After passing through the post-processing calculators, the final Price Information (P_(N)) 95 is output from the pricing engine 50. This entire operation can be implemented with software, which can be provided on media such as magnetic or optical disks.

[0023] Details of the operation of the discount calculators 70 are described with respect to FIGS. 5 and 6. As described above, the Price Environment (PE) 90 and the current Price Information (I_(N)) 65 is input to the series of discount calculators 70 from the pre-calculators 60. In this section, the operation of a single discount calculator will be described. Of course, in accordance with the invention as described above, many discount calculators may be applied. The Price Environment passes through the discount calculators to a qualifier operation 110, which applies the rules of the particular Price Environment and will be described in detail with respect to FIG. 6.

[0024] The rules determine the situations when it is appropriate to allow the discount calculator to perform a calculation. For example, the rule may require a ten percent discount to be applied to blue shirts when the customer has purchased more than four items. Thus, when the order “qualifies” for the discount by including five items, the discount is applied to the blue shirts. As is evident, this rule has two parts, a condition and a target. If both parts are present in the rule, both must be satisfied for the rule to apply. The condition is what is required for the discount to be applied. Here, the condition is satisfied if the customer purchases five or more items. The target is the particular item or items that will be discounted. Here, the target is blue shirts. In this instance, both the condition and the target are satisfied, and the ten percent discount can be applied in the discount calculator. Alternatively, a rule may only have a condition, and not a target. For example, if an order has more than four items, discount everything ten percent.

[0025] In one embodiment, the particular rules are input by a site designer in a pricing model description language via a user interface. Rules-based pricing permits many advantages. It allows for tremendous flexibility in determining what should be discounted and what the discount should be. It can determine whether every user gets a discount (e.g., a ten percent discount on red items) or if only certain users get a selective discount if they perform a specific task (e.g., a ten percent discount if the order has more than four items). Rules may also implement personal coupons or promotions that are targeted to the customer, and may incorporate specific dates upon which a discount is to be applied.

[0026] Rules also allow for categorical discounting. They are not necessarily tied to the particular items, but also can be based upon metadata about the items (e.g., the color of the item). A rules-based system allows a rule to be applied to all products sold on the web site. For example, if a rule allows discounting of red items on Valentine's Day, it will be applied to all red items sold on the site. This avoids a need to price each item individually, with discounts to items being made item by item. This categorical discounting may even be applied to items that are added to the site in the future.

[0027] Turning back to the operation of the system, the steps of the qualifier operation are described in more detail in FIG. 6. The qualifier operation 110 begins by inputting the Price Environment 120. Next, the qualifier extracts a rule from the Price Environment 130. In one embodiment, the extracted rule is stored in a database field in text format, such as XML. The rule is then transformed 140 into an executable rule 150, which is in a format to allow for the execution of the rule, such as Java.

[0028] The rule is then evaluated to determine whether the Price Environment meets the rule condition 160. If no items meet this condition 170, the output of the qualifier indicates to the discount calculators that no prices are to be modified 175. If the condition is met 180, the rule is evaluated to determine whether the target exists in the Price Environment 190. If no target items exist 200, then the output of the qualifier indicates to the discount calculators that no prices are to be modified 175. If the target item does exist 210, then the output of the qualifier provides a set of items to the discount calculators in which the prices must be modified according to the rule 220.

[0029] Returning to FIG. 5, when the set of items to be discounted are input to the discount calculators 70, they are matched to the Price Information (I_(N)) 65 that was input from the pre-calculators. The prices of those items are then modified in accordance with the rule to result in modified price (D_(N)) 75. The Price Information now contains the modified price, which is then output to the post-processing calculators for further processing, as described above.

[0030] While there have been shown and described examples of the present invention, it will be readily apparent to those skilled in the art that various changes and modifications may be made therein without departing from the scope of the invention as defined by the appended claims. The preferred embodiments have been described in terms of a web-based system, but the invention is equally applicable to a wireless, phone-based, or any other network-based system. It can even be used in retail stores.

[0031] Moreover, there may be different pricing engines applied to an order, and within each pricing engine there may be different calculators. For example, it is not necessary that the static and dynamic operations be performed on separate calculators. A single calculator may be capable of both static and dynamic calculations. Also, it is not necessary to include pre-calculators to set the initial price. A module having a fixed price operation could be used to set the blank Price Information to an initial price, and then dynamic calculators could modify that price as appropriate. In addition, the Price Environment may include different information, as might the Price Information. Accordingly, the invention is limited only by the following claims and equivalents thereto. 

What is claimed is:
 1. A computer system for dynamic pricing comprising: at least one static calculator for making price calculations that are not conditional; and at least one dynamic calculator for making price calculations based upon conditional rules.
 2. The computer system of claim 1 wherein the at least one static calculator comprises a pre-calculator that determines an initial price.
 3. The computer system of claim 1 wherein the at least one static calculator comprises a post-processing calculator that adjusts a determined price according to a price generation algorithm.
 4. The computer system of claim 1 wherein the at least one dynamic calculator further comprises a qualifier and a discount calculator.
 5. The computer system of claim 4 wherein the qualifier applies rules to determine if an item is qualified to receive a discount.
 6. The computer system of claim 5 wherein the rules comprise a condition that must be satisfied for an item to qualify for the discount.
 7. The computer system of claim 5 wherein the rules comprise a condition that must be satisfied for an item to qualify for the discount and a target upon which to apply the discount.
 8. The computer system of claim 5 wherein the discount calculator applies a discount to an item that is determined to be qualified to receive a discount.
 9. The computer system of claim 1 wherein the static calculators further comprise a pre-calculator that determines an initial price and a post-processing calculator that adjusts a determined price according to a price generation algorithm; and the at least one dynamic calculator further comprises a qualifier and a discount calculator.
 10. The computer system of claim 1 wherein the at least one static calculator and the at least one dynamic calculator make up a pricing engine.
 11. The computer system of claim 10 further comprising a plurality of pricing engines.
 12. The computer system of claim 11 wherein one of the plurality of pricing engines calculates a price for a particular item
 13. The computer system of claim 11 wherein one of the plurality of pricing engines calculates a shipping price of a particular item.
 14. The computer system of claim 11 wherein one of the plurality of pricing engines calculates an applicable tax amount for a particular item.
 15. The computer system of claim 11 wherein one of the plurality of pricing engines calculates an amount comprising a price for all items in an order, shipping costs and applicable taxes for the order.
 16. The computer system of claim 10 wherein the pricing engine is connected to a network for determining prices of items for sale over the network.
 17. The computer system of claim 16 wherein the network is the Internet.
 18. The computer system of claim 16 wherein the network is a wireless network.
 19. The computer system of claim 16 wherein the network is telephone-based.
 20. A system for dynamic pricing comprising: at least one static calculator for making price calculations that are not conditional; at least one dynamic calculator for making price calculations based upon conditional rules, wherein the dynamic calculator further comprises a qualifier and a discount calculator.
 21. A system for dynamic pricing comprising: at least one static calculator for making price calculations that are not conditional; and at least one dynamic calculator for making price calculations based upon conditional rules, wherein the at least one static calculator comprises at least one pre-calculator that determines an initial price.
 22. A system for dynamic pricing comprising: at least one static calculator for making price calculations that are not conditional; and at least one dynamic calculator for making price calculations based upon conditional rules, wherein the at least one static calculator comprises at least one post-processing calculator that performs final adjustments to a price based upon a price generation algorithm.
 23. A system for dynamic pricing comprising: at least one static calculator for making price calculations that are not conditional; and at least one dynamic calculator for making price calculations based upon conditional rules, wherein the static calculators further comprise a pre-calculator that determines an initial price and a post-processing calculator that adjusts a determined price according to a price generation algorithm; and the at least one dynamic calculator further comprises a qualifier and a discount calculator.
 24. A computer system for dynamic pricing comprising: a module for setting an initial price on at least one item; and at least one dynamic calculator for modifying the initial price on the at least one item based upon conditional rules.
 25. A method of performing dynamic pricing on at least one item comprising the steps of: setting an initial price on the at least one item; performing one of more dynamic price calculations on the at least one item based upon one or more conditional rules, wherein these two pricing steps yield price information for the at least one item.
 26. A method of performing dynamic pricing on at least one item comprising the steps of: performing one or more static price calculations on the at least one item that are not conditional; and performing one or more dynamic price calculations on the at least one item based upon one or more conditional rules, wherein these two price calculation steps yield price information for the at least one item.
 27. The method of claim 26 further comprising the step of utilizing elements of a price environment to perform the calculations.
 28. The method of claim 26 further comprising outputting price information after the calculations are complete.
 29. The method of claim 28 wherein the price information comprises a price calculation history which further comprises one or more of the rules used to calculate the price.
 30. The method of claim 29 wherein the price calculation history may be used to recalculate a price in the future.
 31. A method of allowing a user to create rules for dynamic pricing comprising the steps of: providing at least one static calculator for making price calculations that are not conditional; providing at least one dynamic calculator for making price calculations based upon conditional rules; and providing a user interface that allows a user to input at least one conditional rule.
 32. The method of claim 31 wherein the rule is input in text format.
 33. The method of claim 32 further comprising a step of transforming the rule to an executable format.
 34. A computer program product, residing on a computer-readable medium, for dynamic pricing, the computer program product comprising instructions for causing a computer to: set an initial price on at least one item; and perform dynamic price calculations on the at least one item, wherein these instructions yield price information for the at least one item.
 35. The computer program product of claim 34 wherein the computer-readable medium includes a magnetic disk.
 36. The computer program product of claim 34 wherein the computer-readable medium includes an optical disk.
 37. A computer program product, residing on a computer-readable medium, for dynamic pricing, the computer program product comprising instructions for causing a computer to: perform static price calculations on at least one item that are not conditional; and perform dynamic price calculations on the at least one item based upon conditional rules, wherein these instructions yield price information for the at least one item. 